Bitstream caused major turmoil in the budget sector. It inspired a number of existing CD users to upgrade their players with the new generation of outboard converters. But the King of the Hill is Meridian's 203 at #500, and this is still too dear for many budget-level shoppers. The arrival of a truly cost-effective design with tweak credibility couldn't have been better-timed.

At #380, the Audio Alchemy Digital Decoding Engine v1.0 is within reach of an even greater number of consumers than the league champion. A #120 difference is a lot when you're talking low-to-mid triple figures, so the the DDE is as clever an example of niche marketing -- the step below the Meridian -- as you're likely to find.

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Precious name and miniscule dimensions aside, the DDE is item designed to meet a price without sacrificing anything important. Indeed, I was predisposed toward this baby before switching on because of its size -- 226x45x135mm (WHD) -- and the polarity inversion switch. Hell, I'd pay #380 just to add a stand-alone polarity inverter to my players, never mind a D/A converter thrown in for free. I'm mentioning both of these aspects at the beginning because they may make the DDE a perfect choice for at least two types of user, in addition to one on a budget.

The first is anyone who's short of space; the second is the dyed-in-the-wool phase inversion devotee. And as correct polarity appears to be even more important with digital sources than it was with analogue, this handy switch can mean the difference between a pleasurable listening experience and near-fatal earache. And the inversion takes place in the digital domain.

That tiny fascia contains two switches and three LEDs. The first switch chooses between digital coaxial and TOSlink optical inputs. A red LED indicates 'locked', to show the successful reception of a signal, and two green LEDs marked 'analog' and 'digital' indicate 'power on' status for the separate power supply regulators within. Last is the polarity switch, marked 0o and 180o.

Across the even tinier back plate are the DC input, the coaxial and TOSlink digital inputs, a coaxial digital output, phono sockets for analogue output and something extra to suggest that the DDE won't suffer from obsolescence. This is a switch and a 4-pin DIN-like output for an I2S (Inter-IC Sound) bus, the industry standard for interfacing a variety of digital products including converters, signal processors and whatever else Philips and Friends have up their sleeves.

Digital signals fed into the DDE enter a filtration network, the 'clean' signal then actively buffered and routed to the data demodulator; this signal can be accessed via the rear panel as the digital output.